A form of
white-collar crime, skimming is taking cash "off the top" of the daily receipts of a business (or from any cash transaction involving a third interested party) and officially reporting a lower total. The formal legal term is
defalcation.
Examples
A skimming crime may be simple
tax evasion: the owner of a business may fail to "ring up" a transaction and pocket the cash, thus converting a customer's payment directly to the owner's personal use without
accounting
Accounting, also known as accountancy, is the measurement, processing, and communication of financial and non financial information about economic entities such as businesses and corporations. Accounting, which has been called the "languag ...
for the
profit
Profit may refer to:
Business and law
* Profit (accounting), the difference between the purchase price and the costs of bringing to market
* Profit (economics), normal profit and economic profit
* Profit (real property), a nonpossessory intere ...
, thereby the owner avoids paying either business or personal
income taxes on it. A famous example of this crime occurred at
Studio 54
Studio 54 is a Broadway theater and a former disco nightclub at 254 West 54th Street in the Midtown Manhattan neighborhood of New York City. Operated by the Roundabout Theatre Company, Studio 54 has 1,006 seats on two levels. The theater was ...
discotheque, which was forced to close as a result.
Skimming at
casinos is associated with the funding of
organized crime. In May 1963, the
FBI turned over to the
Justice Department a two-volume document called ''The Skimming Report'' which detailed skimming of
gambling profits by
Las Vegas casinos to avoid taxes.
The report documented how
pre-tax profits from casinos were being routed to various organized crime syndicates across the nation. No one could be prosecuted as the FBI obtained its information by illegally
bugging casino money rooms. Casino skimming during the 1970s and 1980s is featured in
Nicholas Pileggi's nonfiction book ''
Casino: Love and Honor in Las Vegas'' and in the film ''
Casino'', which is based on it.
Skimming may additionally be the direct
theft of the cash; in addition to hiding it from tax authorities, the perpetrator hides the taking from an
employer
Employment is a relationship between two parties regulating the provision of paid labour services. Usually based on a contract, one party, the employer, which might be a corporation, a not-for-profit organization, a co-operative, or any othe ...
, business partners, or shareholders. A large scale such allegation has been leveled at
Satyam Computer Services concerning the
billion dollars missing from the company's coffers.
Skimming may be necessitated by a third crime; for example, an otherwise honest businessman who pays taxes and does not cheat his partners might still be forced to skim some cash from the business and use it to give to an
extortionist in the form of a
bribe,
kickbacks, or payment to a
protection racket or
loan shark or even a
blackmailer
Blackmail is an act of coercion using the threat of revealing or publicizing either substantially true or false information about a person or people unless certain demands are met. It is often damaging information, and it may be revealed to fam ...
.
Other related usages can include things such as
corrupt government officials "skimming" cash received as
foreign aid
In international relations, aid (also known as international aid, overseas aid, foreign aid, economic aid or foreign assistance) is – from the perspective of governments – a voluntary transfer of resources from one country to another.
Ai ...
.
References
{{reflist
Finance fraud
Organized crime activity